A key Senate Committee has rejected a proposal to impose strict
new controls on foreign investment in agricultural land.
The Economics Legislation Committee recommended that Parliament
not pass the Foreign Acquisitions Amendment (Agricultural Land)
Bill 2010. The Bill was introduced late last year by Senators
Xenophon and Milne.
If passed, this Bill would:
require Federal Treasurer approval for the acquisition of an
interest in farms of more than 5 hectares;
require the Treasurer to consult a statutory checklist of
"national interest" issues before approving such an
require the Treasurer to publish details of all agricultural
The Committee was made up of members of the ALP and the Liberal
Party, and Senator Xenophon. Senator Xenophon was the only member
of the Committee to dissent from its conclusions.
Although the current political balance in both houses of
Parliament is unsettled, the fact that the two major parties'
representatives recommended rejection of the Bill is an indication
that it will not become law.
The national interest test
The Bill proposes a detailed national interest test for foreign
acquisitions of farms. This would not apply to other foreign
acquisitions, thus creating an anomalous situation in which the
Foreign Acquisitions and Takeovers Act contained two quite
different national interest tests.
The Senate Committee cited this anomaly as a reason for
rejecting the Bill. It also made a comment that is relevant to the
wider issue of whether FATA should have a detailed national
interest test in place of the current test (which basically says
that determining the national interest is entirely a matter for the
The Committee thought that the current test is working fine, and
there is no need for a detailed statutory test:
"the deliberate intention of
the drafters of the FATA... was to allow a flexible interpretation
and application of the Act, which accommodates for changing
circumstances. The committee is concerned that the bill's
proposed legislated national interest test will be inflexible and
3.34 The committee recommends that the current mechanism,
whereby the national interest test is determined on a case-by-case
basis at the discretion of the Treasurer, is sufficient and should
In general terms, FATA's monetary threshold for notification
of private acquisitions of Australian businesses is a minimum of
Since most farm acquisitions are worth a lot less than that, the
drafters of the Bill proposed that the threshold for such
acquisitions should be based on the area of the farm.
The Committee rejected the concept of a spatial threshold.
However, it acknowledged that the current monetary threshold does
not capture many agricultural purchases. To that end, it appeared
to suggest that the monetary threshold might be revisited down the
"The committee acknowledges
the evidence which suggests that the $231 million threshold for
foreign investment in the agricultural sector would rarely trigger
a FIRB review. However, the committee asserts that the current data
gathering and research project should be completed before any
adjustment to the threshold is made. Following the reporting of
better data, the FIRB figure should then be reviewed to allow for
an appropriate threshold." 
Other problems with the Bill
As well as the detailed national interest test and the spatial
threshold, the Committee identified two other significant problems
with the Bill:
its requirement to publish details of relevant applications
under FATA could, by compromising their privacy, undermine foreign
investor confidence in the agricultural sector;
the imposition of stricter controls on agricultural
acquisitions might be inconsistent with Australia's obligations
under various free trade agreements and might breach article 1 of
the OECD Code.
 This is a
reference to a number of current governmental research projects
into the extent of foreign investment in Australian agricultural
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